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Hey guys! If you coiuld please answer these few qu...




Hey guys! If you coiuld please answer these few questions I would greatly appreciate it! It may seem like a lot because I must also post the story. Thank you so much in advance!!! Road King Trucks Introduction Michael Livingston has recently been hired as the CEO of Road King Trucks, Inc. Previously he had been the marketing manager for a large manufacturing company and had established a reputation for identifying new consumer trends. Road King Trucks Inc. is a California-based truck manufacturing company. The company is well known for manufacturing large, heavy-duty trucks at a reasonable cost. One of its greatest achievements is that its trucks can be easily modified or customized for different applications. Road King Trucks also builds school buses. The company is considering an expansion of its current product line to include transit buses. Mr. Livingston feels that due to high gasoline prices, commuters will be more willing to consider using mass transit instead of using their cars to commute to work. Company Profile Road King Trucks, Inc. was established by the Smith brothers in 1880 as the California Wagon Company. The firm started manufacturing horse-drawn wagons to serve the growing population in California. The brothers quickly realized that the times were changing, so they started looking for the technologies that would keep them at the forefront of their field of business. In 1915, the Smith brothers decided that they needed to make trucks as replacements for the wagons, because trucks were starting to serve the same uses as wagons, and the wagon industry was not going to be viable in the longer term. The company started making school buses in the early 1940?s. Most manufacturers had been commissioned by the government to produce different large vehicles to support World War II operations. Road King Trucks opted to produce buses. It was an easy decision to make, since the buses would use common parts with the company?s trucks, and the customers were local governments. Starting in the 1950?s, the school bus business accounted for about 50% of Road King Trucks? revenues. The Transit Bus Opportunity Mr. Livingston arranged a meeting with the firm?s top management, as well as the chief design and manufacturing engineers to propose his new product. He presented an argument that more individuals in the United States and Canada would be willing to use public transportation than before, because people were becoming more environmentally conscious. Also, recent increases in fuel costs seemed to be long lasting. This was an opportunity to get people hooked on transit buses, as he put it. The proposal under consideration was for the introduction of a large, public transport bus. To distinguish Road King Trucks from other manufacturers, the proposal included details about the level of comfort, air-conditioning, efficiency, and quietness of operation that needed to be developed. Mr. Phillips and Mr. Lopez, the two engineers, reacted enthusiastically and quickly pointed out that the bus could be based on the company?s trucks. The frame currently used for building the trucks could be modified to accommodate buses at a relatively low cost. The marketing vice president, Mr. Chen, pointed out that a marketing analysis could be done quickly, and at a reasonable cost. At this point, Mr. Livingston charged the participants in the meeting to produce a financial plan for the development and production of a transit bus. Public Transportation The use of public transportation had declined steadily since the 1950?s. Most people were opting to use their personal vehicles for all of their transportation needs. Recently, however, most of the metropolitan areas in the United State and Canada, the target markets for the new bus, had become more and more congested; and parking, which was already very expensive, was becoming scarce. This combination of trends has renewed the public?s interest in good and reliable public transportation. Several municipalities have been campaigning to their residents and commuters that they should use public transportation for business commuting, and only use their cars for shopping and weekend activities. However, such campaigns need to be supported by making high quality public transportation available to the target riders. The Decision Three weeks after the initial meeting, the vice presidents presented the sales and cost forecasts shown in the attached exhibits. The information presented contains the cost of production, financing information, and warranty cost estimates. The proposals also contained two engine options for the engines: The Detroit engine, and the Marcus engine. The Detroit engine was more expensive to install, but had a lower warranty cost. The Marcus engine was less expensive to install, but had a higher warranty cost. This begged the question: Which engine should be used? Issues and Analyses Mr. Livingston noticed that there was a great deal of enthusiasm among the management group about the transit bus opportunity, but his cautious nature told him to also seek a more objective viewpoint. Consequently, he sought out you to analyze the proposed project and provide your recommendations directly to him. The issues he wants you to address in your analysis and report are the following: 1) How much importance should be given to the energy cost situation? 2) What are the project?s cash flows for the next twenty years? What assumptions did you use? 3) What is the company?s cost of capital? What is the appropriate discount factor (which may be different) for you to use in evaluating the bus project? 4) If you decide to go ahead with the project, which of the two engines should be used in the bus, and why? 5) Evaluate the quality of the project, by using appropriate capital budgeting techniques. 6) Would you recommend that Road King Trucks accept or reject the project? What are the key factors on which you base your recommendation? Your final report is due in Blackboard on Sunday November 6 at midnight.,Hey Rachel! I must also submit the exhibits so you will have the proper numbers to work with. Here is the same thing including the exhibits in the attached file. Thank you soo very much!,It must be under 5 pages so anywhere from 3-5 is fine. Did you receive the attachment? And what I was saying is that I choose to extend the date because there was no other option but it is due by midnight tonight...,Oh wait, nevermind. It's due by november 6th so take your time!! I will attached the other supportive files. There are three of them.,Here is the other attachment...,And here is the last attachment. All together there should be 4: 500D Road King Case Introduction 500D Road_King_Trucks_Case Analysis 500D Road_King_Trucks_Project_Deliverables BUS 500D Rubric,Updated message just received from the professor today: Chapters 9_10_11 Review File.xlsx Your RK project is for twenty years per the description, thus a net cash flow spreadsheet needs to be put together. You are the analyst here, there is no right or wrong answer. You have to make assumptions and then show your conclusions and recommendations. The chapters 9-10-11 show this process, also the problems and solutions I have given you in the Course Content section.


Paper#1680 | Written in 18-Jul-2015

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